Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2019 (6) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (6) TMI 1497 - AT - Income TaxDisallowance of expenditure - Addition of 1/3rd of the expenditure claimed under the heads ‘purchases, salaries and administrative expenses’ - CIT-A allowed telescoping of ₹ 30 lakhs offered by the assessee against the disallowance of expenditure made by him - HELD THAT:- As purchases are of vegetables for the daily requirement of the assessee company and as rightly pointed out by assessee, it is not possible to maintain vouchers and bills for each of the purchases such as vegetables, fruits etc. However, inflation of purchases or expenditure cannot be ruled out as assessee itself had agreed for the disallowance on estimation basis at 10% of the turnover. Therefore, disallowance of 10% of the purchases on account of possibility of inflation is to be confirmed. As regards salaries are concerned assessee company being registered with ESI, cannot inflate the expenditure on account of salaries because number of employees and the salaries claimed by the assessee have to tally with the ESI returns filed by the assessee. Therefore, AO is directed to verify the same and if the claim made by the assessee on number of employees to whom salary is allegedly paid is matching with the number of employees mentioned in ESI return, no disallowance is to be made. As regards other administrative expenses all such expenses cannot be disallowed @ 10% without pointing out the defects in the books of the assessee, but, inflation of the expenses also cannot be ruled out. Therefore direct the AO to restrict the disallowance only to 5% of the administrative expenses - Appeal of the assessee is partly allowed.
|